topic Re: What should I expect to hear? in Mortgage Loans

What should I expect to hear?

Anonymous — Mon, 16 Feb 2015 16:09:10 GMT

My wife and I plan on buying next spring and we live in Austin, TX which is a crazy competitive housing market so I want to get an idea of where I stand and what to expect. We are self employed together and started our business in 2013 (sole prop in my name).

My scores - 765TU/764EQ (Credit Karma)

Her scores - 755TU/749EQ (Credit Karma)

2013 Adjusted Gross - $11.7K (First year of business)

2014 Adjusted Gross - $74.6K

2015 project Adjusted Gross - $110K

Monthly Debts - $434 auto loan, $222 student loan & $308 IRS installment (never paid late)

0% CC utilization however we do use an AMEX Gold every month, which I plan on sock drawing for 2 months leading up to our application.

Downpayment $15K

Give me your thoughts on what I should expect and what else I may need to do.

Re: What should I expect to hear?

Anonymous — Mon, 16 Feb 2015 16:10:20 GMT

I'd say y'all are good to go.

Re: What should I expect to hear?

ShanetheMortgageMan — Mon, 16 Feb 2015 18:27:51 GMT

AGI isn't what is used to qualify, it's the net income off Schedule C averaged over 2 years of tax returns. Assuming your net income is $11.7k & $74.6k, then your qualifying income would be $3,595/mo. Your debt payments alone are almost 27% of that figure, not giving you a whole lot of extra room to fit a mortgage payment in before the debt ratios get too high ... FHA caps out at 46.99%/56.99%, conventional you'll probably cap out at 45% total. So with conventional sales price may cap out at a little less than $100k, FHA you could probably go up to $135-140k. If that is well below your price range then you should probably shelve the plans until 2016 after your 2015 tax returns have been filed, that way your qualifying income will go up to $7,691/mo from your projections.

Re: What should I expect to hear?

Anonymous — Wed, 18 Feb 2015 00:00:09 GMT

Thanks for the feedback. We're deinfitely waiting until next spring so we will be approved for more money given our low income year in 2013. My real question is how much should we anticpate being approved to borrow FHA or conventional?

Re: What should I expect to hear?

ShanetheMortgageMan — Wed, 18 Feb 2015 16:32:09 GMT

If you are waiting until you can use the higher income figure then for FHA you should be OK qualifying up to about a $340k sales price. For conventional it'd be more around $315k in my opinion.